5 Stocks to Watch This Week (HD, TGT, KSS, FL, EBAY)
November 14, 2022
Here are some names LikeFolio is keeping a close eye on this week.
The Home Depot (HD)
Home Depot demand grew by +7% in the third quarter vs. the same quarter a year ago, but demand now appears to be weakening. In the first two weeks of November, demand has dropped by -12%. Consumer buzz follows a similar trajectory.
This contrast was evident on both company's last earnings report. Lowe's generates ~75% of sales from DIY customers and just 25% from professional customers. In contrast, Home Depot's professional customers comprise nearly half of its revenue and the company noted, "our large Pros were the best performers this quarter."
Home Depot maintains higher happiness levels and demand growth vs. traditional and eCommerce peers in the home renovation space, but this growth is tempering. Heading into earnings, LikeFolio's score reveals a cautiously bearish outlook.
Target is leaning into its omnichannel approach through its store format. Last week the company introduced a new large-format store (20,000 square feet larger than its current average) that will allow more space for backroom fulfillment to fulfill same-day omnichannel services including Order Pickup and Drive Up.
LikeFolio data is neutral in all major data points going into TGT’s report on Wednesday morning. Demand has slipped by 2 points YoY but Happiness remains highest vs. retail peers AMZN and WMT.
KSS shares jumped last week upon news of a transition in management and positive preliminary third quarter earnings. Chief executive Michelle Gass is stepping down from her position as CEO at Kohl’s on Dec. 2 to become president of Levi Strauss (effective Jan. 2). The company expects earnings of $0.82, higher than the expected forecast of $0.63.
LikeFolio data shows Foot Locker's quarterly mention volume is at decade lows ahead of its 22Q4 earnings report. This loss of buzz momentum coincides with macro trends revealing lower foot traffic in key retail locations. Consumer mentions of shopping in a mall, where most Foot Lockers reside, is down --20% QoQ.
Foot Locker reports on Friday, Nov. 11 before the market open.
EBAY shares have gained steam in November, following a better-than-expected third quarter report. Revenue fell in the time period but remained well above prior guidance. Earnings followed suit, with EPS of $1 in the quarter vs. the expected $0.93.
Consumer interest in high fashion and luxury goods continue to record strength, displaying a tale of two consumers: the haves and the have-nots. Consumer demand for high-end apparel has increased by +61% YoY and demand for high-end furnishings and décor has increased by +15% in the same time frame.
Looking ahead, the most positive long-term indicator for EBAY is its improving sentiment rating. Consumer happiness has risen by +7 points YoY, driven by the company’s on-trend product offerings (like collectibles) and its improved user experience.